Fees to access local currencies can turn into an expensive affair. These costs can be as low as 3% to 5% of your total expenditures, but also reach a mind-blowing 10 to 12% if you are not well prepared, like us in Malawi in 2014! We did not bring enough cash and we had all kinds of cards but not a VISA.
So have a very close look at this aspect, as we are talking about serious money there. For example, take a budget of 15.000 €: it can mean as little as 450 to 750 € in total or as much as… 1.800 €!
Unfortunately, a general answer is impossible since banks and credit card companies work differently in most countries. There are quite a few basic rules though, that in our opinion are valid for any country:
Credit cards are your best friend
Check which credit card / which bank offers the best conditions to pay and especially to withdraw money abroad / on other continents.
Some Credit Cards are better than others…
Remember: what is cheap in your home country is not necessarily cheap on other continents. It might even very well be the contrary! So you should really compare costs for the countries you plan to visit.
Nomadic Matt wrote extensively about this subject, with a strong focus on Northern America (especially USA) though, The “Rest of The World” is unfortunately rather neglected…
For German speaking countries, consider opening an account at DKB Deutsche Kredit Bank: the account is free of charge so is cash withdrawal worldwide. As far as we know, a unique service in Continental Europe. I opened an account there one year ago, and is very satisfied with the service delivered!
Always withdraw up to the limit, as there are fixed fees with each transaction
This applies to most Credit & Debit Cards! But this is not really big news…
Do not change on the street or on the black market unless there is a real and big gain
In the vast majority of countries, exchange in the streets is risky. There is no limit to the number of scams. The last one we experienced crossing from Mozambique to Malawi where money exchanger used a manipulated calculator giving wrong results! So just avoid it. And if need be, just exchange small amounts of money (for instance at a border), but not more than absolutely necessary…
In some countries though, the Black Market will give you an incredible advantage. In Venezuela for instance, you get several times the official rate on the Black Market.
Check with fellow travelers before you enter a country – They are the best source of information. We personally use the ThornTree Forum from the Lonely Planet and so far always got accurate information.
Check how much you can withdraw in a country at what kind of ATM
Local ATMs often don’t allow withdrawing the full amount that you can withdraw with your card back home or in other countries. Do your homework before starting a trip or entering a country, it can help you save a LOT of money.
Let me give you 3 examples:
- In India, I could withdraw 400 € at City Bank ATMs. At other ATMs I got one third of that. That’s a huge difference considering the fees involved.
- In Iran, due to the embargo I had no access to cash at all, except what I carried when entering the country. Having to carry cash like this for weeks is a strange feeling. Besides, I was always afraid of running out of money. This kept me away from mid-range hotels and from buying lovely art work.
- In Malawi, in 2014, I was not able to withdraw more than 40.000 Kwacha / 70 Euro at a time, which turned awfully expensive. To make matters worse, in Malawi Master Card is not accepted. VISA is the only way to pay by Credit Card. Not that a lot of businesses accepted those: scuba diving centers, upmarket hotels and car rental companies mostly. It turned into a nightmare when I tried to rent a car! In Malawi, to travel cheaply, you needed cash.
Avoid to run out of cash on the first day of the week / of the month…
In many countries, people withdraw money the day they get paid. You can have huge lines on these days, or worse: no more cash in the machines. It happened to us in Ladakh!
To close this subject, a credit card can get lost or stolen. There, we recommend two things:
- Have all the information to cancel a credit card ready!
You should have the emergency phone number of your credit card provider or bank ready, as well as your credit card number. On your phone, or your laptop, on your mail account and with a person you trust. If you lose it or it gets stolen, cancel it immediately!
- Have a back-up person
Not every credit card provider / bank sends new cards abroad. The Austrian Maestro System does not send debit cards abroad. So check this with your credit card provider or bank, and eventually have it sent to a trusted back-up person that can forward it to you. Some credit cards get replaced worldwide within 24 hours though…worth checking before leaving.